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Saudi Pak Industrial and Agriculture Investment Co.

From Shamim Ahmed Rizvi, Islamabad
May 21 - Jun 03, 2001

Saudi Pak. Industrial and Agricultural Investment Company (Pvt.), Ltd. has maintained its rising profile during the year 2000. Recently it has successfully added new laurels to its commendable performance when its 4 year term deposit certificates (TFC) earned credit rating of AAA (Triple A) by the renowned JCR-VIS credit rating company Ltd.

Saudi Pak's entity rating was assessed in the middle of 1999 by JCR-VIS Credit Rating Company (Pvt) Limited. The long term entity rating was upgraded to AA (Double A) and short term entity rating, DI+ (Dec One Plus). on the basis of performance for the year ended December 31,1999, long term entity rating was further upgraded to AA+ (Double A Plus). The review of rating on the basis of audited accounts for the year ended December 31, 2000 is on the anvil.

JCR-VIS Credit Rating Company Ltd. assigned preliminary credit rating of AAA (Triple A) to the proposed four-year Term Finance Certificates (TFC) issue of Rs. 600 million of Saudi Pak. Outlook on the rating is stable. The preliminary rating shall be converted into final rating after examination of all signed legal documents by the legal counsel of JCR-VIS Credit Rating Company Ltd. According to an announcement of the company, the assigned credit rating is based on the inherent strength of Saudi Pak, which enjoys an entity rating of AA+ (Double A Plus), while also reflecting the financial structuring of the TFCs.

Saudi Pak has recently diversified its business activities by setting up consultancy and advisory services division. The division will attend to the needs of corporate sector broadly in the fields of protect related services, capital market and information technology. It will also facilitate direct foreign investment in the industrial sector. In addition to meeting the long term financing requirements of industrial projects, it encourages the corporate sector by, among others, providing equity support, underwriting of public issue of shares and investment in Term Finance Certificates. Saudi Pak not only provides the facilities of lease financing to the industrial sector but also extends lines of credit to the leasing companies for a period ranging from three to five year. Saudi Pak arranges syndicate project financing and also participates in the syndication arranged by other banks and financial institutions.

Saudi Pak Industrial and Agricultural Investment Company (Pvt) Limited, established in 1981 offers a broad range of financing facilities to the corporate sector in Pakistan. Its prime objective is to accelerate the industrial development in the country. Acting as a catalyst, it provides long term financial assistance to the investors for setting up medium and large scale projects having orientation towards high value addition and involving maximum utilization of indigenous resources.

In its business operations, Saudi Pak is solely guided by commercial considerations. It maintains high standards of scrutiny in financial, commercial, technical and managerial aspects of the proposals submitted for financing and investments.

During the year 2000, Saudi Pak approved an aggregate financing of Rs. 1,705 million, up by 25.1 per cent over Rs. 1,363 million in 1999. The overall financing of Rs. 1,705 million comprised long term commitments of Rs. 1,303 million and short term commitments of Rs. 675 million. The long term financing included Rs. 700 million for 13 companies, participation in two issues of Term Finance Certificates (TFCs) amounting to Rs. 175 million and nonfunded commitments of Rs. 155 million for five companies.

Since inception to December 31, 2000, Saudi Pak has approved total financing of Rs. 11,033 million for over 200 projects. Manufacturing sector comprised 57.5 per cent of cumulative long term approvals, financial sector 24.3 per cent, services sector 17.1 per cent and energy sector 1.1 per cent.

Saudi Pak believes in prompt disbursement of its approved funds matching to actual requirements of the projects to ensure their completion within the estimated time and cost. Cash disbursements of Rs. 1,477 million were made in 2000, up by 33.3 per cent from 1,108 million in 1999. The cumulative disbursements stood at Rs. 8,815 million.

Vigilant monitoring of projects financed by Saudi Pak remains first priority of the management as it plays important role in timely completion of projects and within the estimated cost. This is necessary for profitable operations of the assisted projects and the recovery of funds disbursed by Saudi Pak. Through intensive monitoring of Saudi Pak financed projects, it is ensured that the funds disbursed to a project are used for the purpose for which these are sanctioned and there is no diversion of funds.

Saudi Pak has built an excellent loan portfolio over the years. The amount of loan recoveries as well as the recovery ratios have been improving continuously. During the year 2000, the current dues collection ratio for long term loans peaked at 93.3 per cent and overall collection ratio showed significant improvement. Cash recovery against short term financing amounted to Rs, 462.1 million in 2000 as against Rs. 383.0 million in 1999, up by 20.7 per cent.

The computerization at Saudi Pak is continuously being upgraded to make it more useful for the end-users. The installation of the company's own intranet mail and servers apart from the company's file server have provided the endusers with the options to get maximum information at a single click. The application packages are standardized to fulfil the word processing and data Analysis needs of the end-users. The software modules have been upgraded to provide more operational support to increase accuracy and efficiency at work. Saudi Pak's web site has been developed in-house and has been made operational. It provides basic information about the company's operations as well as financial and operational highlights.

Besides vertical growth, Saudi Pak is expanding horizontally. It owns and manages an associated concern, Saudi Pak Leasing Company Limited. The company is listed on Karachi Stock Exchange and is known for quality of its lease portfolio. It has been distributing dividends to its share holders regularly and is ranked amongst top five leasing companies The company has enhanced the competitive position of Saudi Pak in the financial sector.

The success of Saudi Pak is attributable to strong capital base and support of the two sponsoring governments coupled with prudent business policies and professional management. Known for quality financial services to the corporate sector in Pakistan, Saudi Pak has tuned up its business strategies regularly to suit the trends in the market. Saudi Pak will continue to emphasise prudence while following its growth path and thrust into new business areas in future.